India’s agricultural background and surplus resources is itself an indication of the huge investment potential in Food Processing. India’s Food Processing Industry is expected to reach $482 billion by 2020 as per the Associated Chambers of Commerce and Industry of India (ASSOCHAM) 2017 report. Despite the large number of people starving in India, almost 25-30% of agriculture produce is estimated to be wasted due to a lack of processing facilities, infrastructure and technology. The Indian Government is well aware of the need to improve processing capacities and is taking many initiatives to stimulate growth in the sector.
The Indian Food Processing Industry received an FDI of $663.23 million from April-December 2016. The Union Food Processing Minister, Harsimrat Kaur Badal, expects the FDI to go up to $10 billion per annum. The mega event, World Food India, to be held in November 2017, is a Government initiative to promote FDI, showcase opportunities and facilitate partnerships between Indian and international businesses and investors in the sector. The event will experience participation from over 20 countries and will provide a platform to showcase offerings and services along the food value chain – production, processing, packaging, technology, equipment, storage, logistics or retail. The Government is also organising other roadshows and events in the sector to promote foreign collaborations.
India has the largest capacity of refrigerated warehouses in the world at 130 million cubic meter and over 75% used only for potatoes. However, India is in need of an Integrated end-to-end Cold Chain solution to reduce post-harvest loss. The Ministry of Food Processing Industries (MoFPI) is presently assisting 135 integrated cold chain projects under its central sector scheme for Integrated Cold Chain and Value Addition Infrastructure. Of this, 97 have commenced operations.
In terms of improving infrastructure, the government has launched a new scheme for the industry – SAMPADA (Scheme For Agro-Marine Processing And Development Of Agro-Processing Clusters) for the period 2016-20. The scheme with an allocation of approx. $930 million will help in generating an investment of about $4.9 billion and facilitate handling of agro-produce valuing about $16 billion. It includes new schemes to promote Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages and Creation / Expansion of Food Processing & Preservation. This initiative hopes to give the much needed thrust to the Food Processing Sector in India with an objective to supplement agriculture, modernise processing and decrease agri-waste.
Further, to create an integrated food system and reduce post-harvest loss, the National Institution for Transforming India (NITI Aayog) is preparing an outline structure for the proposed model Contract Farming Law – to connect farmers to the Food Processing Industry. This drive will increase technology transfer and capital inflow from the private sector.
The government is also formulating a National Food Processing Policy. The policy aims to generate more opportunities for the development of the sector and position India as preferred investment destination, while creating employment, adequate infrastructure, better price for farmers, and supply of affordable and quality produce to consumers. The draft policy is awaiting suggestions from all stakeholders and general public.
The sector is thriving with investment opportunities and many international players are in the bids for a piece of the pie. For instance, the major e-commerce player, Amazon.com Inc., along with joint venture partner Cloudtail currently sells food products in India via Amazon Pantry. Further Amazon has received government nod to stock food & groceries and sell online in India through its wholly-owned subsidiary. The company has proposed to invest over $500 million in retail of food products in India. The new business unit will sell third-party or Amazon’s private labels of locally-produced and packaged food products.
Rising population and increasing urbanisation is only going to increase the food demand. With about $15 billion worth harvest being lost as per the MoFPI, India is in desperate need to ramp up processing of food. The industry and government are fervently looking at foreign collaborations for technological and infrastructure solutions that can be easily applied on a large scale and multiplied.
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